While wholesale pricing has dropped dramatically and the end consumer continues to get more bandwidth at affordable rates, Seacom said in a press statement today (14 June 2012) that there is still work to be done in achieving a fully connected society by 2020.
According to Seacom, the government and the regulator in South Africa (ICASA) are critical players in unlocking further growth through exploring a range of unified initiatives from private-public partnerships and rural development mandates, to spectrum allocation and local loop unbundling.
“The journey of a byte from its global point of origin to the South African consumers’ screen is a long and complex one that involves several players along the way, starting from the upstream supplier, through the submarine cables, and then pushing through long-haul fibre networks linking cities and cellular towers to each other,” said Aidan Baigrie, head of Business development at Seacom. “Internet service providers (ISPs) collect the bandwidth from datacentres and then use their own or shared last mile infrastructure to get to consumers either over the air to their handsets or through the ground to houses and offices.”
Baigrie said that although there has been “spectacular growth” in submarine capacity over the last 2 years, this has not been the case “downstream” with the backhaul and last mile infrastructure players.
“As a result there is a disconnect between the ample supply of affordable international connectivity to the shores, and the supply of affordable bandwidth to both rural- and city-based end-consumers inland,” Baigrie said.
Submarine connectivity accounts for around 90-95% of the distance a byte of information travels, yet is only a fraction of the total cost of a service to the consumer. Seacom explained that backhaul and last mile connectivity on the other hand is scarce and as such is priced at a premium, traditionally providing healthy margins for operators and infrastructure providers who have these assets.
“The upside to the higher margins being offered to terrestrial backhaul players is that this promotes competition,” Seacom said. The cable operator believes that with the inevitable arrival of competitors there will be increased supply of fibre resulting in competitive pricing reductions ensuring the end user reaps the benefits.
“This will ensure that busy routes will be priced more affordably in the next 12 months,” Seacom said.
However, Baigrie warned that this story changes for those in less densely populated areas where the monetary return on investment for rural fibre initiatives is harder to achieve.
Here Government needs to continue to provide incentives for operators to invest in, enter into private-public partnerships, or use vehicles such as state-owned enterprises (SOE) to get backhaul and last mile infrastructure built, Baigrie added. While this is being done by a handful of SOEs, Baigrie said, the most effective means is to incentivise the private sector.
The final and arguably most crucial leg is the last mile, Seacom said.
Last mile connectivity comes in two forms, either through a fixed line such as copper or fibre into homes and offices or over the air from mobile operator base stations to mobile devices. South Africa, being a mobile centric internet market is critically dependent on the latter.
“With the influx of affordable and open access ‘smart’ handsets and devices African’s have leapfrogged the fixed line era and substituted it with mobile connectivity,” said Baigrie. “The result is a strong dependence on our mobile operators and their networks.”
Mobile networks are dependent on available and allocated spectrum to deliver internet over the air and to utilise new technologies such as LTE, or Long Term Evolution.
Seacom said that spectrum is a rare commodity and the government and regulator have key roles to actively optimise the country’s use of spectrum and allocate it fairly and effectively. Baigrie said that they are seeing positive private sector engagement here “in supporting the crystallisation of the regulator’s approach”.
Baigrie went on to say that this issue is being further addressed through initiatives such as the migration from analog, spectrum heavy, television signalling to a digital television service, freeing up bands for reallocation among operators.
“There is a mixed array of communication in the press as to the state of South Africa’s internet, but from our side the picture is looking good for the end-consumer, and with continued engagement from industry stakeholders, the government and the regulator we see 2013 being a landmark year in affordable connectivity for all South Africans,” concludes Baigrie.